(COURTESY TRANSLATION) BEFORE THE WORLD TRADE … · 2019-05-14 · Footwear, WT/DS121/AB/R, adopted 12 January 2000 ... the pricing behaviour of exporters and producers in relation

United States – Final Anti-Dumping Measures on Stainless Steel from Mexico Appellant Submission

DS344 of Mexico

(COURTESY TRANSLATION)

BEFORE THE WORLD TRADE ORGANIZATION

UNITED STATES – FINAL ANTI-DUMPING MEASURES ON STAINLESS STEEL FROM MEXICO

(DS344)

APPELLANT SUBMISSION

OF MEXICO

Geneva

7 February, 2008


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TABLE OF CONTENTS

I. INTRODUCTION...................................................................................................................... 1

II. ALL OF THE ISSUES RAISED BY MEXICO IN THIS APPEAL ARE THE

SUBJECT OF PRIOR SPECIFIC FINDINGS BY THE APPELLATE BODY

THAT SUPPORT THE POSITION OF MEXICO ................................................................ 3

III. THE APPELLATE BODY’S PRIOR FINDINGS REGARDING SIMPLE

ZEROING IN PERIODIC REVIEWS SHOULD BE FOLLOWED .................................... 3

IV. THE PANEL ERRRED IN FINDING THAT “SIMPLE ZEROING” IS “AS

SUCH” NOT INCONSISTENT WITH ARTICLES VI:1 AND VI:2 OF GATT

1994 AND ARTICLES 2.1 AND 9.3 OF AD AGREEMENT ................................................ 4 A. Summary of Relevant Appellate Body Findings and Conclusions ................................. 4 B. The Errors in the Panel’s Reasoning are the Result of its Incorrect

Application of the Customary Rules of Treaty Interpretation ........................................ 10 C. Product as a Whole ......................................................................................................... 10 D. Exporter- or Producer-Specific Margins of Dumping .................................................... 13 E. Contextual Arguments .................................................................................................... 15

1. Existence of Prospective Normal Value Systems .............................................. 15 2. “Mathematical Equivalence” ............................................................................. 18 3. “Potential Consequences” of a Prohibition on Zeroing ..................................... 21

V. CONSISTENCY WITH ARTICLE 2.4 ................................................................................... 26

VI. MEXICO’S “AS APPLIED” CLAIMS ................................................................................... 27

VII. THE PANEL HAS NOT FULFILLED ITS FUNCTION UNDER ARTICLE 11

OF THE DSU ............................................................................................................................. 27

VIII. CONCLUSION .......................................................................................................................... 28


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TABLE OF CASES CITED

Short Title Full Case Title and Citation

Argentina - Footwear Appellate Body Report, Argentina – Safeguard Measures on Imports of

Footwear, WT/DS121/AB/R, adopted 12 January 2000

Argentina – Poultry AD Duties

Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry

from Brazil, WT/DS241/R, adopted 19 May 2003

EC – Bed Linen

Appellate Body Report, European Communities – Anti-Dumping Duties

on Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R,

adopted 12 March 2001

EC – Chicken Cuts Appellate Body Report, European Communities – Customs

Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R,

WT/DS286/AB/R, and Corr.1, adopted 27 September 2005

Korea –Dairy Safeguard Appellate Body Report, Korea – Definitive Safeguard Measures on

Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12

January 2000

US – Corrosion-Resistant

Steel Sunset Review

Appellate Body Report, United States – Sunset Review of Anti-Dumping

Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan,

WT/DS244/AB/R, adopted 9 January 2004

US – Oil Country Tubular

Goods Sunset Reviews

Appellate Body Report, United States – Sunset Reviews of Anti-

Dumping Measures on Oil Country Tubular Goods from Argentina,

WT/DS268/AB/R, adopted 17 December 2004

US – Softwood Lumber V Appellate Body Report, United States – Final Dumping Determination

on Softwood Lumber from Canada, WT/DS264/AB/R, adopted 31

August 2004

US – Softwood

Lumber V (Article 21.5 –

Canada)

Appellate Body Report, United States – Final Dumping Determination

on Softwood Lumber from Canada – Recourse to Article 21.5 of the

DSU by Canada,WT/DS264/AB/RW, adopted 15 August 2006

US – Zeroing (EC 1)

Appellate Body Report, United States – Laws, Regulations and

Methodology for Calculating Dumping Margins (“Zeroing”),

WT/DS294/AB/R, adopted 9 May 2006


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Short Title Full Case Title and Citation

US – Zeroing (EC 1) Panel Report, United States – Laws, Regulations and Methodology for

Calculating Dumping Margins (“Zeroing”), WT/DS294/R, adopted 9

May 2006, as modified by Appellate Body Report, WT/DS294/AB/R

US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to Zeroing

and Sunset Reviews, WT/DS322/AB/R, adopted 23 January 2007

US – Zeroing (Japan) Panel Report, United States – Measures Relating to Zeroing and Sunset

Reviews, WT/DS322/R, adopted 23 January 2007, as modified by

Appellate Body Report, WT/DS322/AB/R


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I. INTRODUCTION

1. Mexico seeks review by the Appellate Body of certain issues of law and legal interpretations of

the Panel in United States – Final Anti-Dumping Measures on Stainless Steel from Mexico,

WT/DS344/R (circulated December 20, 2007)(“Panel Report”). At issue is the measure referred

to by the Panel as “simple zeroing.” Simple zeroing is a measure pursuant to which the United

States investigating authorities in an anti-dumping periodic review compare individual export

transactions against monthly weighted average normal values and do not take into account the

results of comparisons where the export price exceeds the monthly weighted average normal

value when such results are aggregated in order to calculate the exporter’s or producer’s margin

of dumping for the product under consideration.1

2. In making its findings and conclusions regarding the consistency of simple zeroing with the

provisions of the General Agreement on Tariffs and Trade 1994 (“GATT 1994”) and the

Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994

(“Anti-Dumping Agreement”), the Panel failed to interpret the relevant provisions of the GATT

1994 and the Anti-Dumping Agreement in accordance with the customary rules of interpretation

of public international law as required by Articles 3.2 and 11 of the Understanding on Rules and

Procedures Governing the Settlement of Disputes “DSU” and Article 17.6(ii) of the Anti-

Dumping Agreement. In particular, the relevant interpretations set out in the Panel Report are not

permissible under the rules of treaty interpretation in Articles 31 and 32 of the Vienna Convention

on the Law of Treaties.

3. As set forth in detail below, the deficiencies in the Panel’s reasoning and legal interpretations

stem from several key flaws in the Panel’s interpretation of the covered agreements and the

Panel’s role in the dispute settlement process.

4. First, the Panel below erred in failing to follow the Appellate Body’s prior consistent findings and

conclusions in US-Zeroing (EC1) and US-Zeroing (Japan). Those disputes involved the identical

measure (simple zeroing) applied by the United States and the identical issues involved in the

present dispute. The Appellate Body in both US-Zeroing (EC1) and US-Zeroing (Japan) found

that simple zeroing is inconsistent with the United States’ obligations under Articles VI:I and

VI:II of the GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement. Indeed,

the Appellate Body in US – Zeroing (Japan) made a finding that simple zeroing is “as such”

inconsistent with the United States’ obligations under those agreements. The report of the

Appellate Body in that case has been adopted by the Dispute Settlement Body. The adopted

findings of the Appellate Body are final. Pursuant to that report, the United States must bring its

measures into conformity with its obligations and cease to use simple zeroing in periodic reviews.

By allowing the “as such” claim in US – Zeroing (Japan), the report of the Appellate Body serves

the purpose of “preventing future disputes by allowing the root of WTO-inconsistent behaviour to

be eliminated”.2 The findings of the Panel in this dispute not only frustrate this purpose as they

contradict clear findings of the Appellate Body, but also go counter to the objective of providing

1 See Panel Report, paras. 7.7 and 7.84-7.97.

2 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 82.


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security and predictability to the multilateral trading system as provided by Article 3.2 of the

DSU.

5. The Panel in the present dispute involving Mexico has identified no new arguments or proffered

any reasoning or interpretations of law concerning simple zeroing that were not previously

considered and rejected in some form by the Appellate Body in US-Zeroing (EC1) and US-

Zeroing (Japan). Multiple Panels and the Appellate Body have identified an expectation that

panels will follow Appellate Body decisions where, as here, the issues are the same.3 The Panel’s

failure to follow the Appellate Body in this case was unwarranted and, if left uncorrected, will

diminish Mexico’s rights under the agreements relative to other members.

6. The Panel’s refusal to follow the Appellate Body’s prior rulings stems from pervasive errors in

the Panel’s interpretation of Article VI of the GATT 1994 and the Anti-Dumping Agreement.

First, the Panel mistakenly concluded that anti-dumping measures are concerned with the

behaviour of importers in relation to individual import transactions. There is no support for this

conclusion in the text or context of the relevant agreements. Significantly, the Panel’s

misperception of the object of anti-dumping measures has affected the Panel’s conclusions with

respect to the meaning of the terms “dumping” and “margin of dumping.” Contrary to the

Panel’s conclusions, the Appellate Body has clearly and unequivocally confirmed that “margins

of dumping” do not exist for individual importers or export transactions, but rather are based on

the pricing behaviour of exporters and producers in relation to exports of the “product” under

consideration.

7. Second, the Panel erroneously conflated the operation of duty collection systems and the

calculation of “margins of dumping.” The Appellate Body has consistently distinguished

between these two completely distinct concepts under the agreements. As the Appellate Body

has noted, the agreements permit a wide range of collection systems including the retrospective

system utilized by the United States and the various prospective systems used in most other

countries. However, while the agreements provide for flexibility in the structure of such

collection systems, all such systems are subject to the limitation in Article 9.3 that such

collections “shall not exceed the margin of dumping established under Article 2” for the exporter

or producer. The Panel’s failure to observe this distinction has led the Panel to erroneous

conclusions regarding the proper interpretation of the covered agreements, especially the meaning

of “dumping” and “margins of dumping.”

8. Third, the Panel’s reasoning inappropriately permits “margins of dumping” to be defined

differently under different contexts or systems of administration. For example, whereas it is clear

from the text of the agreements that all imports from an exporter or producer found to be

dumping must be considered for purposes of an injury analysis under Article 3, the Panel’s

reasoning suggests that for purposes of duty assessment only a selective subset of the same

imports may be considered “dumped.” The Appellate Body has correctly observed that such

reasoning runs contrary to the uniform definition of dumping provided for in Article 2.1 of the

Agreement.

3 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 188; Article 3.2 of the

DSU.


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9. Fourth, the Panel erroneously based its conclusion on perceived “burdens” of administration. For

example, the Panel assumed that the Appellate Body’s interpretation of the agreements would

“expand the scope of periodic reviews” to cover all export shipments of an exporter or producer.

In fact, the United States system at issue in this dispute already requires that a periodic review

requested by an individual importer must include all export shipments of the exporter(s) or

producer(s) that shipped to that importer. Mexico knows of no review system that permits

subdividing an exporter or producer into shipments only to a specific importer.

10. These and other errors are discussed in detail in this submission. As a whole, the errors identified

herein require reversal of the Panel’s decision by the Appellate Body.

ARGUMENT

II. ALL OF THE ISSUES RAISED BY MEXICO IN THIS APPEAL ARE THE

SUBJECT OF PRIOR SPECIFIC FINDINGS BY THE APPELLATE BODY

THAT SUPPORT THE POSITION OF MEXICO

11. As the Panel acknowledged, this is not the first dispute in which simple zeroing in periodic

reviews has been challenged. The same simple zeroing measure was also challenged in US –

Zeroing (EC1) and US – Zeroing (Japan). In both disputes the Appellate Body clearly and

unequivocally reached the conclusion that simple zeroing is inconsistent with the provisions of

the GATT 1994 and the Anti-Dumping Agreement.4 In reaching this conclusion, the Appellate

Body made legal findings on the precise issues that are appealed by Mexico in this proceeding.

12. The Panel in this dispute has chosen to disregard these prior, directly applicable, Appellate Body

rulings on the same measures and with respect to the same legal questions presented. Instead, it

has chosen to follow a series of panel decisions that were never adopted by the Dispute

Settlement Body (DSB) and were in fact specifically reversed by the Appellate Body.

III. THE APPELLATE BODY’S PRIOR FINDINGS REGARDING SIMPLE

ZEROING IN PERIODIC REVIEWS SHOULD BE FOLLOWED

13. Although Appellate Body reports are, strictly speaking, not binding on panels in other disputes,

there clearly is a legitimate expectation that panels will follow the findings and conclusions in

such reports in subsequent disputes raising issues that the Appellate Body has expressly

addressed. In its report in US – Oil Country Tubular Goods Sunset Reviews, the Appellate Body

stated that “following the Appellate Body’s conclusions in earlier disputes is not only appropriate,

but is what would be expected from panels, especially where the issues are the same.”5

14. Following the Appellate Body’s previous findings and conclusions is fully consistent with Article

3.2 of the DSU which expressly recognizes that “[t]he dispute settlement system is a central

element in providing the security and predictability to the multilateral trading system.” The

4 Panel Report at para. 7.115.

5 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 188.


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dispute settlement system cannot fulfill this important function if panels refuse to follow the

findings and conclusions in previously adopted Appellate Body reports adjudicating the same

measures.

15. In this dispute, not only are the identical measures and issues raised in Mexico’s appeal the

subject of findings and conclusions in two adopted Appellate Body reports, the responding party

in those two previous disputes is also the responding party in this dispute—i.e., the United States.

Moreover, in one of these adopted reports—US – Zeroing (Japan)— the Appellate Body found

that simple zeroing in periodic reviews is “as such” inconsistent with the GATT 1994 and the

Anti-Dumping Agreement. Thus, the Appellate Body’s finding was not limited to a specific set of

facts “as applied”.

16. Clearly in these circumstances the previous findings and conclusions of the Appellate Body

should be followed. Indeed, were the Appellate Body to rule differently in this dispute, that result

would be to determine that Mexico has different, and significantly diminished, rights under the

agreements from the rights of other WTO members. Such a disparate result is clearly

unacceptable and would undermine the integrity of the agreements. It would also violate Article

3.2 of the DSU, which prohibits dispute settlement rulings from diminishing the rights and

obligations provided in the covered agreements.

IV. THE PANEL ERRRED IN FINDING THAT “SIMPLE ZEROING” IS “AS

SUCH” NOT INCONSISTENT WITH ARTICLES VI:1 AND VI:2 OF GATT 1994

AND ARTICLES 2.1 AND 9.3 OF AD AGREEMENT

A. Summary of Relevant Appellate Body Findings and Conclusions

17. Mexico begins this section with a brief summary of the relevant legal findings and conclusions as

they have been explained and confirmed in the consistent line of Appellate Body reports dealing

with the identical measure that is at issue here. These decisions represent the only legal findings

with respect to these issues that have been adopted by the Dispute Settlement Body.

18. The Panel claims that the reasoning followed by the Appellate Body in concluding that simple

zeroing is inconsistent with the covered agreements is based on principles that the Panel found to

be erroneous.6 However, the Panel is incorrect. The Appellate Body has consistently based its

reasoning on three “fundamental disciplines” that apply under the Anti-Dumping Agreement and

the GATT 1994 to all antidumping proceedings and which are firmly rooted in the text of the

agreements as well as their design and architecture.

19. First, under the governing definitions of “dumped” and “dumping” in Articles VI:1 and VI:2 of

the GATT 1994 and Article 2.1 of the Anti-Dumping Agreement, “dumping” must be established

for the product under consideration taken as a whole with respect to each exporter or producer

under investigation or review. “Dumping” is not and may not be measured for individual

importers or import transactions. As the Appellate Body in US – Zeroing (Japan) recalled,

“dumping” is defined in Article VI:1 of the GATT 1994 as occurring when a “product” of one



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country is introduced into the commerce of another country at less than normal value of the

“product.” Consistent with this definition, Article VI:2 provides for the levying of anti-dumping

duties in respect of a “dumped product” in order to offset or prevent the injurious effect of

dumping.7

20. As further explained by the Appellate Body:

“This definition of dumping is carried over into the Anti-Dumping

Agreement by Article 2.1. Furthermore, by virtue of the opening phrase

of Article 2.1—”[f]or the purposes of this Agreement”— this definition

applies throughout the Agreement.8 Thus, the terms “dumping”, as well

as “dumped imports”, have the same meaning in all provisions of the

Agreement and for all types of anti-dumping proceedings, including

original investigations, new shipper reviews, and periodic reviews. In

each case, they relate to a product because it is the product that is

introduced into the commerce of another country at less than its normal

value in that country.”9

21. The Appellate Body also clarified that “margin of dumping” is likewise defined in terms of the

“product” under consideration:

Article VI:2 defines “margin of dumping” as the difference between the

normal value and the export price and establishes the link between

“dumping” and “margin of dumping”. The margin of dumping reflects

the magnitude of dumping. It is also one of the factors to be taken into

account to determine whether dumping causes or threatens material

injury. Article VI:2 lays down that “[i]n order to offset or prevent

dumping, a Member may levy on any dumped product an anti-dumping

duty not greater in amount than the margin of dumping in respect of such

product.” Thus, the margin of dumping also is defined in relation to a

“product”.10

22. The second fundamental legal principle properly relied upon by the Appellate Body is that:

…the Anti-Dumping Agreement prescribes that dumping determinations

be made in respect of each exporter or foreign producer examined. This

is because dumping is the result of the pricing behaviour of individual

exporters or foreign producers. Margins of dumping are established

accordingly for each exporter or foreign producer on the basis of a

7 Appellate Body Report, US – Zeroing (Japan), para. 108.

8 See Appellate Body Report, US – Softwood Lumber V, para. 93. See also Appellate Body Report, US –

Corrosion-Resistant Steel Sunset Review, paras. 109 and 127.


10 Ibid, para. 110 (footnotes omitted).


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comparison between normal value and export prices, both of which relate

to the pricing behaviour of that exporter or foreign producer. In order to

assess properly the pricing behaviour of an individual exporter or foreign

producer, and to determine whether the exporter or foreign producer is in

fact dumping the product under investigation and, if so, by which margin,

it is obviously necessary to take into account the prices of all the export

transactions of that exporter or foreign producer.11

23. In reaching this legal conclusion, the Appellate Body found support in other provisions of the

Anti-Dumping Agreement which likewise make it clear that “dumping” and “margins of

dumping” must relate to the exporter or foreign producer of the “product” at issue. For example,

Article 6.10 requires, “as a rule”, that investigating authorities determine “an individual margin of

dumping for each known exporter or producer”. Similarly, Article 9.4 of the Anti-Dumping

Agreement refers to situations where anti-dumping duties are applied to exporters or foreign

producers not examined individually in an investigation, and provides that such duties shall not

exceed “the weighted average margin of dumping established with respect to the selected

exporters.” In addition, Article 9.5 indicates that the purpose of new shipper reviews is to

determine “individual margins of dumping for any exporters or producers in the exporting

country in question who have not exported the product” and refers to a “determination of

dumping in respect of such producers or exporters.”12

24. The third fundamental principle at issue in this appeal, and one that was entirely ignored by the

Panel, relates to another element of the concept of “dumping” contained in the text of the

agreements. The Appellate Body has correctly observed that the Anti-Dumping Agreement and

the GATT 1994 are not concerned with dumping per se, but with dumping that causes or threatens

to cause material injury to the domestic industry.13

Article 3.1 stipulates that a determination of

injury “shall be based on an objective examination of both the volume of the dumped imports and

the effect of the dumped imports on prices in the domestic market for like products, and the

consequent impact of these imports on domestic producers of such products.” Furthermore,

Article 3.5 of the Anti-Dumping Agreement lays down that “[t]he authorities shall also examine

any known factors other than the dumped imports which at the same time are injuring the

domestic industry and the injuries caused by these other factors must not be attributed to dumped

11

Ibid, para. 111 (footnotes omitted).


13 The Appellate Body observed in this regard that Article VI:1 of the GATT 1994 states that dumping “is to

be condemned if it causes or threatens material injury to an established industry in the territory of a Member or

materially retards the establishment of a domestic industry”. Article VI:6(a) also stipulates that no anti-dumping

duty shall be levied unless the importing Member “determines that the effect of the dumping ... is such as to cause or

threaten material injury to an established domestic industry, or is such as to retard materially the establishment of a

domestic industry.” Article 11.1 of the Anti-Dumping Agreement further provides that “[a]n anti-dumping duty shall

remain in force only as long as and to the extent necessary to counteract dumping which is causing injury.”

Appellate Body Report, US – Zeroing (Japan), para. 113, n.300.


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imports.” Among the non-attribution factors listed in this Article are “the volume and prices of

imports not sold at dumping prices.”14

25. Considering these three fundamental principles, the Appellate Body noted:

it is evident from the design and architecture of the Anti-Dumping

Agreement that: (a) the concepts of “dumping” and “margins of

dumping” pertain to a “product” and to an exporter or foreign producer;

(b) “dumping” and “dumping margins” must be determined in respect of

each known exporter or foreign producer examined; (c) anti-dumping

duties can be levied only if dumped imports cause or threaten to cause

material injury to the domestic industry producing like products; and (d)

anti-dumping duties can be levied only in an amount not exceeding the

margin of dumping established for each exporter or foreign producer.

These concepts are interlinked. They do not vary with the methodologies

followed for a determination made under the various provisions of the

Anti-Dumping Agreement.15

26. Accordingly:

A product under investigation may be defined by an investigating

authority. But “dumping” and “margins of dumping” can be found to

exist only in relation to that product as defined by that authority. They

cannot be found to exist for only a type, model, or category of that

product. Nor, under any comparison methodology, can “dumping” and

“margins of dumping” be found to exist at the level of an individual

transaction. Thus, when an investigating authority calculates a margin of

dumping on the basis of multiple comparisons of normal value and

export price, the results of such intermediate comparisons are not, in

themselves, margins of dumping. Rather, they are merely “inputs that

are [to be] aggregated in order to establish the margin of dumping of the

product under investigation for each exporter or producer.”16

27. As the Appellate Body correctly observed, these fundamental principles apply with equal force in

all anti-dumping proceedings, including periodic reviews as well as original investigations. The

definitions of “dumping” and “dumped” described above in Articles VI:1 and VI:2 of the GATT

1994 and Article 2.1 of the Anti-Dumping Agreement apply without limitation throughout the

agreements. As the Appellate Body explained in US – Zeroing (EC):

We note that Article 9.3 refers to Article 2. It follows that, under

Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT

14

Appellate Body Report, US – Zeroing (Japan), para. 113 (footnotes omitted).




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1994, the amount of the assessed anti-dumping duties shall not exceed

the margin of dumping as established “for the product as a whole”.

Therefore, if the investigating authority establishes the margin of

dumping on the basis of multiple comparisons made at an intermediate

stage, it is required to aggregate the results of all of the multiple

comparisons, including those where the export price exceeds the normal

value. If the investigating authority chooses to undertake multiple

comparisons at an intermediate stage, it is not allowed to take into

account the results of only some multiple comparisons, while

disregarding others.17

28. In addition, the obligation to make a determination of dumping in respect of each exporter or

foreign producer subject to the proceeding is not limited to original investigations:

Article 6.10 of the Anti-Dumping Agreement provides relevant context

for the interpretation of the term “margin of dumping” in Article 9.3 of

the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.

Article 6.10, which is part of the context of Article 9.3, provides that

“[t]he authorities shall, as a rule, determine an individual margin of

dumping for each known exporter or producer concerned of the product

under investigation”. Therefore, under the first sentence of Article 6.10,

margins of dumping for a product must be established for exporters or

foreign producers. The text of Article 6.10 does not limit the application

of this rule to original investigations, and we see no reason why this rule

would not be relevant to duty assessment proceedings governed by

Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT

1994.18

29. Moreover, the Appellate Body indicated that this interpretation is consistent with the definition of

the notion of dumping:

Establishing margins of dumping for exporters or foreign producers is

consistent with the notion of dumping, which is designed to counteract

the foreign producer’s or exporter’s pricing behaviour. Indeed, it is the

exporter, not the importer, that engages in practices that result in

situations of dumping. For all of these reasons, under Article 9.3 of the

Anti-Dumping Agreement and Article VI:2 of the GATT 1994, margins of

dumping are established for foreign producers or exporters.19

30. These two principles regarding the calculation of the margins of dumping in periodic reviews lead

to the conclusion that:

17

Appellate Body Report, US – Zeroing (EC), para. 127 (footnotes omitted).

18 Ibid., para. 128.

19 Ibid., para. 129.


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[I]n a review proceeding under Article 9.3.1, the authority is required to

ensure that the total amount of anti-dumping duties collected from all the

importers of that product does not exceed the total amount of dumping

found in all sales made by the exporter or foreign producer, calculated

according to the margin of dumping established for that exporter or

foreign producer without zeroing. The same “ceiling” applies in review

proceedings under Article 9.3.2, because the introductory clause of

Article 9.3 applies equally to prospective and retroactive duty assessment

systems.20

31. As confirmed by the Appellate Body, therefore, in any anti-dumping proceeding, including

periodic reviews under Article 9.3, the margin of dumping must be calculated in respect of the

individual exporters or foreign producers subject to such proceeding and for the product under

consideration taken as a whole. Once the authorities define the product under consideration, the

scope of that definition also determines the scope of the authorities’ dumping determination.

Therefore, “dumping” as defined in the Anti-Dumping Agreement cannot exist in relation to a

specific type, model, or category of the product subject to the proceedings, or in relation to

individual import transactions. Rather, the degree to which dumping has occurred must be

determined for each exporter or producer under consideration, as stipulated under Article 6.10 of

the Agreement, based on all its export sales of the product under consideration taken as a whole.

32. It follows that when the calculation of dumping entails more than one level of comparisons

between the normal value and the export price, the results of the intermediate comparisons are not

“margins of dumping.” Rather, they are inputs to be taken into account in the determination of

the margin of dumping for the product under consideration as a whole for each known exporter or

foreign producer.

33. When applied to duty assessment proceedings under Article 9.3 of the Agreement, the above-

described reasoning necessarily leads to the conclusion that the margin of dumping calculated for

the product under consideration as a whole - for each exporter or foreign producer subject to such

proceedings - operates as the upper limit for the anti-dumping duties that may be collected for

that product from the exporter or producer. The chapeau of Article 9.3 provides that “[t]he

amount of the anti-dumping duty shall not exceed the margin of dumping as established under

Article 2”. This means that:

“. . .the total amount of anti-dumping duties collected on the entries of a

product from a given exporter shall not exceed the margin of dumping

established for that exporter”, in accordance with Article 2.21

34. Consequently, a method of calculation of anti-dumping duties that aggregates the results of

intermediate comparisons, but fails to include the results where normal value is lower than the

export price in the calculation of the overall margin for the product under consideration as a

whole, would be inconsistent with Article 9.3 of the Agreement: the “margin of dumping” must

20

Appellate Body Report, US – Zeroing (Japan), para. 156.

21 Ibid., para. 155 (footnote omitted).


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aggregate the results of all sales comparisons of the product under consideration for each exporter

or producer under consideration.

35. The Panel erroneously rejected the fundamental legal principles governing the issue of the proper

calculation of anti-dumping duties as identified by the Appellate Body and thereby committed a

legal error. This error led the Panel to the incorrect conclusion that simple zeroing is permissible

under the GATT 1994 and the Anti-Dumping Agreement. Mexico addresses each of these errors

below.

B. The Errors in the Panel’s Reasoning are the Result of its Incorrect Application

of the Customary Rules of Treaty Interpretation

36. The specific errors in the Panel’s reasoning, which are discussed in detail below, are symptomatic

of its incorrect application of the customary rules of treaty interpretation that are codified in

Articles 31 and 32 of the Vienna Convention, specifically the application of “context” and “object

and purpose” in Article 31(1).

37. The foregoing legal findings of the Appellate Body are based on interpretations that properly take

into account the text and context of the relevant terms.22

Moreover, the interpretations give

harmonious meaning to all applicable provisions of the Anti-Dumping Agreement and GATT 1994

as a whole.23

The detailed character of the Appellate Body’s interpretations necessarily reflects it

appropriately giving meaning to all of the relevant terms in their context and in light of the object

and purpose of the Agreements.

38. The terms “dumping” and “margins of dumping” are illustrative. These terms appear throughout

the Anti-Dumping Agreement and Article VI of GATT 1994 and are applicable to all of the

various stages of anti-dumping proceedings. The Appellate Body has interpreted these terms

harmoniously in all of these contexts and in light of the object and purpose of the Agreements..

39. In contrast to the approach of the Appellate Body, the Panel has focused on specific uses of the

terms in a manner that neglects the broader context of the Agreements as a whole. This narrow

application of the rules of treaty interpretation underlies the interpretative errors discussed below.

C. Product as a Whole

40. The Panel erroneously rejected the fundamental principle that dumping and margins of dumping

must be determined with respect to the “product” at issue, taken as a whole. The primary basis

for the Panel’s rejection of this principle is the Panel’s observation that the phrase “product as a

whole” does not appear in the text of Article 2.1 of the Agreement or Articles VI:1 and VI:2 of

the GATT 1994.24

The Panel claimed that the expression was instead “developed in WTO dispute

22

Appellate Body Report, EC – Chicken Cuts, para. 193.

23 Appellate Body Report, Korea –Dairy Safeguard, para. 81; Appellate Body Report, Argentina – Footwear,

para. 81.



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settlement,”25

and that the obligation to calculate a margin of dumping for the product “as a

whole” cannot be inferred from the ordinary meaning of the words “product” or “products.”26

While acknowledging the lengthy explanation provided by the Appellate Body in paragraphs 108

to 116 of US – Zeroing (Japan) summarized above, the Panel asserted that this explanation was

not “convincing” and that “the Appellate Body did not explain how the texts of Article VI:1 and

VI:2 of the GATT 1994 and Article 2.1 of the Anti-Dumping Agreement necessarily give rise to

the interpretation that the words ‘product’ or ‘products’ used in the definition of ‘dumping’ may

only be interpreted as referring to the product under consideration as a whole, not the individual

export transactions.”27

The Panel asserted further that the principle identified by the Appellate

Body “does not have a solid textual basis in the relevant treaty provisions” and that “a good faith

interpretation of the ordinary meaning of the texts of Articles VI:1 and VI:2 of the GATT 1994

and Article 2.1 of the Anti-Dumping Agreement, read in their context and in light of the object

and purpose of the mentioned agreements, does not exclude an interpretation that allows the

concept of dumping to exist on a transaction-specific basis.”28

41. The Panel erred in the above reasoning. The Appellate Body’s interpretation is certainly not

weakened by the absence of the precise words “as a whole” in Article 2.1 of the Anti-Dumping

Agreement next to the word “product.” Nor is it weakened by the fact that it may not be possible

to infer these words from the “ordinary meaning” of the word “product.”29

It is the Appellate

Body’s appropriate consideration of the context of these terms in the Agreements that makes their

interpretations correct, and makes impermissible an interpretation allowing the calculation of

anti-dumping duties based on selected individual export transactions.

42. The Appellate Body carefully and precisely read the words “product” and “products” in the

context of the Agreements and their object and purpose and properly concluded that the only

meaning of those terms that is consistent with that context as well as their object and purpose is

that the terms refer to the product sold by a producer or exporter, taken as a whole. The

alternative interpretation proffered by the Panel is unsupported by the text or the context of the

Article VI of the GATT 1994 and the Anti-Dumping Agreement and is therefore impermissible. In

particular, as the Appellate Body has pointed out, interpreting the word “product” as referring to

individual export transactions or the “margin” calculated for individual importers is inconsistent

with: (1) the fundamental obligation to calculate a margin of dumping for each individual

exporter or producer, a task that cannot be accomplished without taking into account the prices of

all export transactions of the exporter or producer under consideration; and (2) the obligation to

levy anti-dumping duties only if the dumped imports cause or threaten to cause material injury to

25

The Panel originally stated in the Interim Report that the phrase was “developed by the Appellate Body”

but in response to comments by the United States this phrase was altered to read “developed in WTO dispute

settlement.” See Panel Report, paras. 6.12, 6.13.

26 Panel Report para. 7.117.

27 Ibid, para. 7.118.

28 Ibid, para. 7.119.

29 Mexico notes that the phrase “product in an individual export transaction” (or whatever other alternative

description the Panel believes would accurately describe the meaning of the word “product” in this context) is also

absent from the text.


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the domestic industry producing the like product, an obligation that likewise cannot be fulfilled if

the investigating authorities are free to disregard some or most of the sales comparisons for an

exporter.30

43. In an effort to support its preferred interpretation of the words “product” and “products,” the

Panel resurrected an earlier reasoning of the Panel in US – Zeroing (EC1), referring to the use of

the word “product” in the context of Article VI:631

and Article VII of the GATT 1994.32

According to the Panel “[t]he fact that these words may be interpreted in a significantly different

ways” when used elsewhere in the GATT 1994 “weakens the proposition that they must

necessarily be interpreted to refer to the totality of exports of the product under consideration as a

whole, as opposed to individual transactions, when they are used in the context of dumping

determinations.”33

44. In response to the identical argument offered by the United States before the Panel, Mexico

pointed out that Article VII of the GATT 1994 is not concerned with the pricing behaviour of

exporters and producers but rather with the presentation of value for purposes of duty application

on individual imports. Thus, the contexts of Article VI and Article VII are entirely different from

each other and it is therefore natural, and to be expected, that the term “product” could have

different meanings in these separate contexts.34

45. The Panel erroneously and without elaboration rejected Mexico’s argument on the grounds that it

is “based solely on Mexico’s understanding of the object and purpose of these two provisions and

does not have any textual basis.”35

To the contrary, this view is soundly based on appropriate

principles of treaty interpretation which have been consistently applied by the Appellate Body.

46. In summary, Mexico established before the Panel both textual and contextual support for the

correct interpretation that the term “product” necessarily refers to the product under consideration

taken as a whole with respect to each exporter or producer examined. No other meaning of the

term can be reconciled with the terms “dumping” and “margins of dumping” (further discussed

below). Mexico also notes that the necessary relationship between dumping and material injury

or threat thereof, and, indeed, the context, object and purpose of the agreements to remedy or

offset such dumping and injury by exporters and producers validates the interpretation offered by

Mexico and refutes the Panel’s proffered interpretation.

30

See, e.g., Appellate Body Report, US – Zeroing (Japan), paras. 111, 113.

31 The Panel never articulated the basis of its argument concerning the use of the term “product” in the

context of Article VI:6. Therefore, Mexico cannot respond to that point.

32 Panel Report, paras. 7.120, 7.121.

33 Ibid, para. 7.121.

34 Second Written Submission of Mexico, para. 62.

35 Panel Report, para. 7.122.


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D. Exporter- or Producer-Specific Margins of Dumping

47. The Panel erroneously rejected a second fundamental principle concerning this issue, namely, that

dumping must be calculated with respect to each exporter or foreign producer examined. It will

be recalled that the Appellate Body has previously identified that the requirement to calculate

“margins of dumping” with respect to exporters and producers is consistently and frequently

reflected in the text of the Agreements, including Articles 6.10 and 9.4 of the Anti-Dumping

Agreement which clearly refer to margins of dumping in relation to individual exporters or

producers.36

Indeed, as the Appellate Body has also observed, the pricing behaviour that is the

subject of the Anti-Dumping agreement is the pricing behaviour of individual exporters or

producers, not importers.37

Mexico further notes that, as the Appellate Body has also held, there

is no textual support for the notion that importers can “dump” a product.

48. The above points notwithstanding, the Panel rejected the principle that “dumping” measures only

exporter or producer behaviour, asserting that “the obligation to pay anti-dumping duties is not

incurred on the basis of a comparison of an exporter’s total sales, but on the basis of an individual

sale between the exporter and its importer. It is therefore a transaction-specific liability. This

importer-specific or transaction-specific character of the payment of anti-dumping duties has,

therefore, to be taken into consideration in interpreting Article 9.3.”38

49. The Panel’s reasoning on this key point is incorrect. First, the Panel erred by equating the

mechanism chosen by national authorities to collect anti-dumping duties from importers with the

rules that must be followed by the investigating authorities in measuring margins of dumping for

exporters. The two concepts are fundamentally different under the Agreements, as the Appellate

Body has consistently recognized. Obviously, the liability to pay anti-dumping duties at the time

of entry, like liability to pay Customs duties, may be imposed upon importers. Just as obviously,

however, the pricing behaviour that is to be offset by the assessment of anti-dumping duties is

engaged in by exporters and producers, not importers. Importers do not incur antidumping

liability as a result of their own actions or decisions, but as the result of exporters’ or producers’

behaviour. Thus, imposing liability to pay anti-dumping duties on importers does not in any way

support the Panel’s assertion that “dumping” is or may be “importer-specific.”

50. The Panel’s further assertion that the obligation to pay anti-dumping duties is not incurred on the

basis of a comparison of an exporter’s total sales but is instead incurred on the basis of an

individual sale between the exporter and its importer, is also factually incorrect. Article 9.3 of the

Anti-Dumping Agreement, which applies to all systems of collection, clearly states that the anti-

dumping duty collected “shall not exceed the margin of dumping as established under Article 2.”

The “margin of dumping” referred to in Article 9.3 is, as noted above, the margin of dumping for

the party that is the object of the measure and who engages in “dumping” -- the exporter or

producer under consideration. Anti-Dumping duties may be collected from importers, but

36

See, e.g., Appellate Body Report, US-Zeroing (Japan), para. 112.

37 Ibid, para. 111.



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importers do not “dump” and cannot have “margins of dumping” within the meaning of the

Agreements.

51. While the liability to pay anti-dumping duties may be based on a specific transaction, the rate and

amount of that payment is subject to the limit imposed under Article 9.3: the margin of dumping

calculated for the exporter or producer under Article 2.

52. The Panel’s mistaken belief that “margins of dumping” within the meaning of the agreements can

exist for importers undermines its analysis throughout the Panel Report. For example, in

paragraphs 7.125 and 7.126 of the Panel Report, the Panel, in describing collection under a

“prospective” system, observed that an importer can request a refund if it believes that the amount

of anti-dumping duty it paid exceeds “its margin of dumping.” In fact, Article 9.3.2 nowhere

contains a reference to an importer’s “margin of dumping.” As shown above, such a term has no

meaning: an importer as such cannot price its export sales below its “normal value” because the

importer does not have a “normal value” and it is not the importer’s prices that are at issue.

Article 9.3.2 instead appropriately refers to “the margin of dumping” and “the actual margin of

dumping” – a clear reference to the margin of dumping for each exporter or producer examined,

the parties that may engage in “dumping.”

53. The Panel also quoted with approval the discussion in the US – Zeroing (Japan) Panel Report

with respect to Article 6.10. According to the Panel in that case, the mere fact that Article 6.10

refers to the calculation of “an individual margin of dumping for each known exporter or

producer” for “the product under investigation” says nothing about whether the investigating

authorities in calculating the exporter or producer’s margin of dumping “must accord the same

weight to transactions in which the export price is above the normal value as to transactions in

which the export prices is below the normal value.”39

54. This is also incorrect. As the Appellate Body has held, selectively giving less weight to

transactions where the export price exceeds normal value, “distorts the prices of certain export

transactions because ‘the prices of [certain] export transaction [made] are artificially reduced.”40

“In this way,” the Appellate Body continued, “‘the use of zeroing under the [T-T] methodology

artificially inflates the magnitude of dumping resulting in higher margins of dumping and making

a positive determination of dumping more likely.” The Appellate Body has further stated that

“[t]his way of calculating cannot be described as impartial, even-handed, or unbiased.”41

As such,

this methodology violates the “fair comparison” obligation contained in Article 2.4. Although

these observations were made with respect to the transaction-to-transaction methodology, they

clearly apply with equal force in the context of simple zeroing in periodic reviews where the

average-to-transaction methodology is used.

39

Panel Report, US- Zeroing (Japan), para. 7.111 (quoted in Panel Report, para. 7.127).

40 Appellate Body Report, US – Zeroing (Japan), para. 146 (quoting Appellate Body Report, US –Softwood

Lumber V (Article 21.5- Canada), para. 139).

41 Ibid, para. 146 (quoting Appellate Body Report, US –Softwood Lumber V (Article 21.5- Canada), para.

142).


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E. Contextual Arguments

55. The Panel has also asserted several contextual arguments in support of its decision in this case.

As discussed below, the Panel erred with respect to each of these arguments.

1. Existence of Prospective Normal Value Systems

56. Raising yet another argument previously considered and rejected by the Appellate Body, the

Panel asserted that the existence of a “prospective normal value” system under Article 9.4(ii) of

the Anti-Dumping Agreement lends support to its view that “anti-dumping duties can be

determined on a transaction-specific basis” under retrospective systems such as that employed by

the United States.42

57. The Panel provided the following discussion of prospective normal value systems:

Article 9.4(ii) clearly provides for a prospective normal value system. In

a prospective normal value system, the importer's liability is determined

through the comparison of the price paid by the importer in a given

transaction and the prospective normal value. Under this system, prices

paid in other export transactions have no bearing on this importer's

liability. In other words, the fact that other importers do not dump, or

dump at a lower margin, does not affect the liability of an importer who

imports at dumped prices. If the determination of liability for anti-

dumping duties can be determined on a transaction-specific basis in a

prospective normal value system, there is no reason why the same cannot

be the case in the context of the retrospective duty assessment system

under Article 9.3.2.43

58. However, as the Panel acknowledged, the Appellate Body has previously rebutted this argument,

noting that:

Under a prospective normal value system, exporters may choose to raise

their export prices to the level of the prospective normal value in order to

avoid liability for payment of anti-dumping duties on each export

transaction. However, under Article 9.3.2, the amount of duties collected

is subject to review so as to ensure that, pursuant to Article 9.3 of the

Anti-Dumping Agreement, the amount of the anti-dumping duty collected

does not exceed the margin of dumping as established under Article 2. It

is open to an importer to request a refund if the duties collected exceed

42

Panel Report, paras. 7.130, 7.131.

43 Ibid, para. 7.131.


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the exporter's margin of dumping. Whether a refund is due or not will

depend on the margin of dumping established for that exporter.44

59. In response to this statement by the Appellate Body, the Panel acknowledged that duties collected

under a prospective normal value system are subject to assessment proceedings under Article 9.3.

However, the Panel stated that:

We note that in an anti-dumping investigation, authorities base their

dumping determinations on past data and impose the duty on the basis of

that data. After the duty is imposed, however, there is always a

possibility of an importer paying a duty above its margin of dumping.

There is therefore a need for having a mechanism for the refund of duties

paid in excess of the margin of dumping of individual importers. Under

the current system embodied in the Anti-Dumping Agreement, this

objective is achieved through the duty assessment proceedings provided

for under Article 9.3. Obviously, we do not consider duties collected

under a prospective normal value system to be exempt from duty

assessment proceedings. That is because in such a system, just as in

other systems of duty collection, there may be changes subsequent to the

imposition of the duty, which may necessitate a duty assessment

proceeding. We note that Article 9.3 does not shed light on how duty

assessment proceedings are to be carried out. We would think, however,

that a duty assessment proceeding with regard to duties collected on the

basis of a prospective normal value system would have to be consistent

with the nature of the referenced system. It would have been quite

illogical, in our view, if the drafters allowed prospective normal value

systems and yet envisaged that duties collected under such a system

would be subject to a duty assessment proceeding under Article 9.3 in a

manner that would require the authorities to calculate a margin of

dumping not on the basis of the data pertaining to the importer seeking

the initiation of the proceeding, but based on the aggregated data

pertaining to the exporter(s) from whom the importer imports. The

prospective normal value system is based on the notion of transaction-

based duty collection. The Appellate Body's reasoning that duties

collected under such a system are nevertheless subject to duty assessment

proceedings just like other duties assessed on a prospective basis is,

therefore, far from being convincing.45

(emphasis added)

60. The Panel’s assertion that the “margin of dumping” in a duty assessment proceeding under

Article 9.3 should be calculated on the “basis of the data pertaining to the importer seeking the

44

Appellate Body Report, US – Zeroing (Japan), para. 160 (footnote omitted) (cited in Panel Report, para.

7.132).



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initiation of the proceeding”46

is inconsistent with the legally correct interpretation of the

Appellate Body. The Panel confused the amount of duty that is permitted to be collected under a

prospective normal value system with the “margin of dumping” itself. Under the agreements, the

two concepts are distinct. Although duty liability may be importer-specific, the “margin of

dumping” may not because it is specific to the exporter or producer of the products at issue. Thus,

the Panel was legally incorrect in referring to “an importer paying a duty above its margin of

dumping” and “the margin of dumping of individual importers”. Indeed, it is precisely because

the amount of duties collected from importers under a prospective normal value system may

differ from the actual “margin of dumping” of the exporter or producer, that Article 9.3.2 requires

an opportunity for a review. 47

The purpose of such a review is to ensure that the amount

collected does not exceed the margin of dumping established under Article 2. As the Appellate

Body noted “[i]t is open to an importer to request a refund if the duties collected exceed the

exporter’s margin of dumping. Whether a refund is due or not will depend on the margin of

dumping established for that exporter.”48

Pursuant to the terms of Article 9.3, the exporter or

producer’s margin of dumping must, in turn, be established consistently with Article 2 -- that is to

say, with respect to the product at issue taken as a whole -- and cannot selectively ignore or alter

the results of any intermediate comparisons.

61. As is more clearly stated in later portions of the Panel’s report, the Panel also appeared to be

concerned that the interpretation of the Appellate Body would lead to a waste of administrative

resources by requiring exporters or producers to provide export sales information relating to all

importers in the importing country, even where only one importer actually requested an

assessment review of its imports.49

62. However, such a concern is based on an erroneous premise. Mexico observes that the record of

the Panel shows that the administrative review procedures at issue in this appeal require an

examination of all of an exporter or producer’s export sales whenever at least one importer has

requested an administrative review of its imports of subject merchandise from the exporter or

producer in question.50

Thus, the Panel’s stated concern is factually incorrect on the evidence

before it and inapplicable. Moreover, the legal relevance of such a concern by the Panel, even if

it were correct, is highly dubious. Mexico questions the authority of a dispute settlement panel to

46

Ibid.

47 As the Appellate Body noted, “[u]nder any system of duty collection, the margin of dumping established n

accordance with Article 2 operates as a ceiling for the amount of the anti-dumping duties that could be collected in

respect of the sales made by an exporter. To the extent that duties are paid by an importer, it is open to that importer

to claim a refund if such a ceiling is exceeded. Similarly, under its retrospective system of duty collection, the

United States is free to assess duty liability on a transaction-specific basis, but the total amount of anti-dumping

duties that are levied must not exceed the exporters’ or foreign producers’ margins of dumping.” Appellate Body

Report, US – Zeroing (Japan), para 162.

48 Appellate Body Report, US – Zeroing (Japan), para 160.


50 Mexico’s Responses to the Panel’s Questions from the Second Substantive Meeting (31 July, 2007), paras.

17-19. The United States did not dispute these facts. See Comments of the United States on Mexico’s Answers to

the Panel’s Questions in Connection with the Second Substantive Meeting, para. 9.


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interpret a covered agreement based on the Panel’s unsupported notions of administrative

efficiency.

63. In summary, the Appellate Body has previously heard and correctly answered the Panel’s

contextual arguments based on Article 9.4(ii). There is no necessary inconsistency between the

collection of anti-dumping duties on the basis of prospective normal values and the obligation to

calculate and assess margins of dumping for exporters and producers on the basis of all export

transactions of the product under consideration. If margins of dumping could be determined at

the level of individual export transactions, the inflated duties collected could seriously distort

trade beyond the impact of dumping and injury by exporters and producers, thereby producing a

result that was clearly never intended by the negotiators.

2. “Mathematical Equivalence”

64. The Panel also resurfaced the notion of “mathematical equivalence” related to the average-to-

transaction comparison methodology as set forth in the second sentence of Article 2.4.2 with the

average-to-average methodology reflected in the first sentence of that Article. According to the

Panel’s argument, absent zeroing, the margin of dumping calculated for an individual exporter or

producer will always and necessarily be the same (mathematically equivalent) using either the

average-to-average comparison methodology under the first sentence of Article 2.4.2 or the

average-to-transaction comparison methodology under the second sentence of Article 2.4.2.

Eliminating zeroing from the average-to-transaction comparison methodology would therefore

render the comparison methodology in the second sentence of Article 2.4.2 inutile. Thus, the

argument goes, an interpretation of the agreement prohibiting zeroing is impermissible because it

would render a portion of the agreement inutile.

65. Mexico in this case has not challenged the use of “simple zeroing” in “targeted dumping”

investigations. The analysis of mathematical equivalence relates only to the issue of whether

“targeted dumping” analysis is rendered inutile if zeroing is not permitted under the second

sentence of Article 2.4.2. The Appellate Body need not rule on that issue. However, if the

Appellate Body rules on this issue, it is clear for the reasons discussed above that the inutility

argument fails. The Panel’s rejection of Mexico’s arguments on that basis are in error and should

be reversed by the Appellate Body.

66. Mexico further notes that the Appellate Body has now had several occasions to consider the

“mathematical equivalence” argument and has consistently rejected the position advocated by the

United States and adopted by the Panel. 51

Mexico recalls that the Appellate Body, considering

zeroing in the context of the transaction-to-transaction comparison methodology described in the

first sentence of Article 2.4.2, has twice rejected the mathematical equivalence argument noting,

inter alia, that: (1) the mathematical equivalence argument is based on a set of assumptions that

may not hold in all situations and “[o]ne part of a provision setting forth a methodology is not

rendered inutile simply because, in a specific set of circumstances, its application would produce

51

See Appellate Body, US – Zeroing (Japan), paras. 133-136; Appellate Body Report, US – Softwood

Lumber V (21.5), paras. 97-100.


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results that are equivalent to those obtained from the application of a comparison methodology set

out in another part of that provision”;52

and (2) the second sentence of Article 2.4.2 provides for

an “exception”, and as such, “the comparison methodology in the second sentence of Article 2.4.2

([W-T]) alone cannot determine the interpretation of the two methodologies provided in the first

sentence, that is, [T-T] and [W-W]”;53

that even if the W-W and T-T methodologies were to yield

equivalent results in certain situations, “this would not be sufficient to compel a finding that

zeroing is permissible under the T-T comparison methodology, because the mathematical

equivalence argument does not relate to this methodology.54

67. As it has done in the past, the United States offered hypothetical calculations as examples in an

attempt to establish mathematical equivalence. In response, Mexico showed that the U.S.

example works only because it is based on particular assumptions, including that the calculation

of normal values in the average-to-transaction methodology is based on period-long averages.

Mexico pointed out that the assumption of using period-long average normal values is not

required by the Anti-Dumping Agreement and, in fact, is contrary to the methodology for average-

to-transaction comparisons that is actually called for in the USDOC regulations. Those

regulations call for the use of contemporaneous monthly average normal values in “targeted

dumping” situations, while mandating period-long normal value averages (normally one year) for

average-to-average comparisons. Mexico provided examples that showed that mathematical

equivalence fails if monthly normal values are used. Indeed, Mexico demonstrated that applying

the comparison methodologies called for in the U.S. regulations would yield non-equivalent

results in the majority of cases. The United States did not dispute this fact.55

68. The Panel rejected Mexico’s demonstration, stating as follows:

Mexico has shown no support in the text of Article 2.4.2 for the

proposition that the normal value figures used under the [average-to-

average] and the [average-to-transaction] methodologies may, or have to,

be based on different time periods. If they are based on the same time

periods, then the mathematical equivalence holds. In this regard, we

agree with the panel in US – Zeroing (Japan) that “[t]here exists no

substantive difference between ‘a weighted average normal value’ in the

first sentence of Article 2.4.2 and ‘a normal value established on a

weighted average basis’ in the second sentence of that provision”. We

also note that the justification for the use of the asymmetrical third

methodology under Article 2.4.2 is the significant difference between the

52

Appellate Body, US – Zeroing (Japan), para. 133 (quoting Appellate Body Report, US – Softwood Lumber

V (21.5), para. 99).

53 Ibid, para. 133 (quoting Appellate Body Report, US – Softwood Lumber V (21.5), para. 97).

54 Appellate Body, US – Zeroing (Japan), paras. 133. The Appellate Body noted, in fact, that it could be

argued in reverse that the use of zeroing under the two comparison methodologies set out in the first sentence of

Article 2.4.2 would enable investigating authorities to capture pricing patterns constituting “targeted dumping”, thus

rendering the third methodology inutile. Ibid., para. 133.



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pattern of export prices, not the normal value. Hence, Article 2.4.2 does

not, in our view, lend support to Mexico’s proposition that the time

frame for the determination of the WA normal values under the first and

the third methodologies may be different.56

(footnotes omitted).

69. Mexico also noted before the Panel that there was no textual support for the proposition that using

different normal value averaging periods was prohibited as between average-to-average and

average-to-transaction methodologies were used. Mexico pointed out that the terminology used

in the first and second sentences of Article 2.4.2 are in fact not identical and that the framers of

the provision would be expected to have used the same language or made cross-references

between the sentences had they intended the same meaning in both sentences with respect to time

periods. The Panel rejected this argument, stating:

While Mexico is right that the phrases used in Article 2.4.2 to refer to the

[weighted average] normal values in the context of the first and the third

methodologies are not identical, this does not, in our view, suffice to

assert that they refer to different normal values that may be based on

different time frames. Mexico has not explained how exactly the text of

Article 2.4.2 supports such an interpretation. It is, in our view, at least

one of the permissible interpretations of Article 2.4.2 that, contrary to

Mexico's point of view, this provision does not justify the establishment

of the WA normal values in the context of the first and the third

methodologies on the basis of different time periods. We therefore

disagree with Mexico's argument, taking into consideration the principles

on the treaty interpretation that we follow in this case (supra, paras. 7.3-

7.5).57

70. Again, the Panel erred. First, the difference in language speaks for itself. The fact that different

language is used in the two sentences suggests strongly that the averaging periods in the two

methodologies are not compelled to be identical in all cases. Second, there is no textual basis in

the agreements, and the Panel has identified none, for concluding that the use of monthly

averages is prohibited when using the average-to-transaction comparison methodology under the

second sentence of Article 2.4.2. In order for a methodology of determining normal values to be

prohibited in all cases (as it must be for mathematical equivalence to be proven) such a

prohibition must be found in the terms of the Agreement interpreted consistently with Articles 31

and 32 of the Vienna Convention which is not the case here.

71. Moreover, there is not only a textual basis, but arguably an affirmative obligation, to use shorter

averaging periods (such as monthly averages) when using the average-to-transaction

methodology, at least in some circumstances. The second sentence of Article 2.4 requires that

comparison between export price and normal value must be made “at as nearly as possible the

same time.” This contemporaneity requirement is clearly met in the case of average-to-average

comparisons because normal values and export prices are averaged over the same periods. In the

56

Ibid, para. 7.140.

57 Ibid, para. 7.141.


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case of average-to-transaction comparisons, however, this contemporaneity requirement would

likely not be met if individual export transactions at a single point in time are compared to prices

averaged over a period of twelve or more months. It may be for this reason that the United States

statute and regulations require the use of contemporaneous monthly average normal values when

making average-to-transaction comparisons, even though annual normal value averaging periods

are required for average-to-average comparisons. Given the total absence of any textual or

logical basis for prohibiting different averaging periods for normal values used in the average-to-

average and average-to-transaction comparison methods, there is simply no support for the

Panel’s conclusion that averaging periods in these two methods may never differ within a

proceeding.

72. A second error in the Panel’s analysis of this issue is the Panel’s assertion that prohibiting the use

of different averaging periods under the average-to-transaction comparison methodology is “at

least one of the permissible interpretations of Article 2.4.2.”58

73. In this instance, the Panel erroneously invoked the principles of Article 17.6(ii) of the Anti-

Dumping Agreement. Even if the United States had articulated an interpretation that the Anti-

Dumping Agreement always prohibits the use of shorter normal value averaging periods in the

average-to-transaction comparison methodology than in the average-to-average methodology,

under the Panel’s logic Mexico’s interpretation is equally permissible. If an interpretation that

different averaging periods may be used is permissible, then any claim of mathematical

equivalence and inutility is necessarily defeated. That is plainly the case here.

74. In addition, the Panel improperly dismissed as “irrelevant” Mexico’s proof that the methodology

demonstrating the lack of mathematical equivalence is the same methodology prescribed in the

U.S. regulations for comparisons implementing the second sentence of Article 2.4.2. While

Mexico has not challenged the consistency of those US regulations with the relevant agreements,

it is certainly not “irrelevant” that the United States, which is now disputing the consistency with

the agreements of the use of monthly average normal values, prescribes exactly the same

methodology in the USDOC regulations implementing Article 2.4.2, and asserted at the time that

those regulations comply with WTO objectives. At a minimum, Mexico’s evidence demonstrates

that the United States has not, outside the context of arguments in this dispute settlement

proceeding, previously interpreted the Agreements to preclude in all cases the use of different

time periods for averaging normal values.

3. “Potential Consequences” of a Prohibition on Zeroing

75. Lastly, the Panel attempted to justify its rejection of the Appellate Body’s previous interpretations

of the Agreements on the grounds that the prohibition on simple zeroing “would lead to

undesirable results.” The Panel identified three such results: (1) “competitive disincentives”; (2)

that an end to zeroing would “unnecessarily expand the scope of periodic reviews”; and (3) that

ending zeroing would inhibit the removal of injury to the affected domestic industry. As

discussed below, these arguments cannot be squared with the reality of how antidumping

58

Ibid, para. 7.141.


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proceedings are actually structured and conducted. The Panel’s arguments on these points are

completely without merit and should be rejected by the Appellate Body.

a) “Competitive Disincentives”

76. With regard to alleged “competitive disincentives,” the Panel stated:

If, while calculating in a periodic review the amount of the duty to be

paid by a given importer, the authorities have to take into account the

export prices paid by other importers importing from the same exporter

or foreign producer, this would have unfair consequences in the market.

In this situation, importers with high margins of dumping would be

favoured at the expense of importers who do not dump or who dump at a

lower margin. In such situations, importers importing at dumped prices

would pay less than their true margin of dumping because of other

importers refraining from importing at dumped prices. We agree with

the United States that “[t]his kind of competitive disincentive to engage

in fair trade could not have been intended by the drafters of the

Antidumping Agreement and should not be accepted ... as consistent

with a correct interpretation of Article 9.3”.59

(footnote omitted)

77. As a preliminary matter, the glaring legal error in the Panel’s pronouncements on this issue is its

assumption that importers have “margins of dumping”. As noted above, and as clearly confirmed

by the Appellate Body, margins of dumping exist only in relation to exporters or producers. Thus,

the Panel’s premise is incorrect, and must assume the conclusion in order to work. Importers may,

of course, purchase products that are priced below normal value by exporters or producers; but

there is no such thing under the WTO agreements as “importers with high margins of dumping,”

“importers who do not dump or who dump at a lower margin,” or an importer’s “true margin of

dumping.” The only “true” margin of dumping that is legally relevant to an importer is the

margin of dumping of the exporter or producer of the articles it imported and that margin of

dumping must reflect all of the export transactions by the producer or exporter.

78. Moreover, to the extent that the Panel’s conception of the “incentives” created through the

application of dumping measures are legally relevant at all, the Panel has conflated two separate

concepts: (1) calculation of margins of dumping and (2) assessment and collection of anti-

dumping duties from importers. Margins of dumping relate to the behaviour of exporters or

producers, not importers.60

If dumping is to be eliminated, exporters or producers will have to

raise their export prices or lower their normal values. Importers cannot do either on their own;

therefore, they cannot eliminate dumping. To the extent that the anti-dumping measures imposed

are intended to create incentives for a change in pricing behaviour (rather than merely to offset

dumping), the party to be encouraged logically is the exporter or producer. None of the criticisms

59

Ibid, para. 7.146.



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levelled by the Panel suggests that the elimination of zeroing would encourage foreign producers

and exporters to continue “dumping” as defined in the agreements.

79. Mexico has not argued, and it is not implied in its position, that individual importers must be

assessed anti-dumping duties at the identical rate as all other importers or that it is not permissible

to assess antidumping duties on an importer- or transaction-specific basis. As the Appellate Body

has made clear:

a reading of Article 9.3 of the Anti-Dumping Agreement and Article VI:2

of the GATT 1994 does not suggest that final anti-dumping duty liability

cannot be assessed on a transaction- or importer-specific basis, or that the

investigating authorities may not use specific methodologies that reflect

the distinct nature and purpose of proceedings governed by these

provisions, for purposes of assessing final anti-dumping duty liability,

provided that the total amount of anti-dumping duties that are levied does

not exceed the exporters’ or foreign producers’ margins of dumping.61

80. Accordingly, although the assessment of anti-dumping duties upon an individual importer is, by

operation of Article 9.3, necessarily capped by the margin of dumping for each exporter or

producer from which purchases were made,62

no party has argued that within that overall

limitation assessments may not be made on individual importers or transactions.

b) Administrative Burdens

81. The Panel also argued that the interpretation advanced by the Appellate Body creates

administrative problems. In particular, the Panel asserted that setting a limit on assessment of

anti-dumping duties:

[. . .] would unnecessarily expand the scope of periodic reviews because

the exporters would have to submit information pertaining to all of their

export transactions rather than those pertaining to the importer requesting

the review. This would, in our view, also cause administrative

inconvenience because the investigating authorities would have to

analyze all that information and be unable to complete the review in a

timely manner. Such a heavy burden could also encourage non-

cooperation on the part of the exporters. 63

(footnote omitted)

82. This comment by the Panel reveals a fundamental lack of understanding of how periodic reviews

are conducted under the retrospective system employed by the United States. As the Appellate

Body has held, exporters and producers have margins of dumping. Therefore, the Anti-Dumping

61

Ibid, para. 155 (quoting Appellate Body Report, US – Zeroing (EC1), para. 131).

62 Ibid, para. 156.



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Agreement requires that exports of the “product” by an exporter or producer must be examined in

order to calculate a “margin of dumping.”

83. Consistent with this obligation. under the U.S. system of conducting periodic reviews, if an

exporter is reviewed at all, the USDOC will examine all the export sales of that exporter or

producer. As the evidence before the Panel demonstrates, USDOC regulations permit periodic

reviews to be requested by foreign producers, their domestic competitors, and by importers

(among others).64

Foreign producers or exporters are permitted to request periodic reviews

covering their own exports. Domestic interested parties may request periodic reviews of any

foreign producer or exporter of the product concerned. Neither the domestic producer nor the

exporter or producer may limit a review to specific importers of a product covered by an anti-

dumping duty order. While importers may request periodic reviews of any exporter or producer

of the product they themselves imported from that exporter or producer, such a review must cover

all exports by each reviewed exporter or producer. 65

There is, in fact, no option under the U.S.

regulations to limit the scope of the review only to exports “pertaining to the importer requesting

the review,” as the Panel erroneously assumed.

84. The Panel’s assumption that requiring margins of dumping to be calculated for each exporter or

producer with regard to all its exports in the period would be an added administrative burden is

thus utterly without basis. Because periodic reviews in the United States are conducted precisely

in the manner over which the Panel expressed concern about imposing additional burdens, there

is on the record of this dispute no evidence that conducting periodic reviews in this manner would

hinder timely completion of reviews, place heavy burdens on the administering authorities, or

inhibit the cooperation of exporters or producers. This is precisely how the United States

conducts its periodic reviews under current law.

c) Removal of Injury

85. Lastly, the Panel asserted that the Appellate Body’s reading of the Agreements would preclude

the achievement of a core function of anti-dumping duties, i.e., removing the injurious effect of

dumping. In particular, the Panel stated:

The fact that some imports are made at non-dumped prices would not, in

our view, change the fact that the domestic industry in the importing

country is injured by dumped imports. In other words, the injury

64

Mexico’s Responses to the Panel’s Questions from the Second Substantive Meeting (31 July, 2007), para.

17 (referencing section 351.213(b) of the USDOC Regulations, 19 C.F.R. § 351.213(b)).

65 See ibid. para. 18 (referencing Automotive Replacement Glass Windshields from the People’s Republic of

China, 69 FR 61790 (21 October, 2004), Issues and Decision Memorandum at 10-11 (Comment 4), Exhibit MEX-

13) (“The regulation limits an importer’s ability to request an administrative review to its own producers or

exporters. The purpose of this limitation is to allow only those companies with a stake in the outcome to request an

administrative review of the producers relevant to them. Once the Department decides to conduct its review,

however, any such review covers that producer’s or exporter’s sales to all importers.”). See also references in

footnote 49 of this submission.


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suffered by the domestic industry because of dumped imports would not

be removed by imports at non-dumped prices.66

86. This view is incorrect and highlights the failure of the Panel to give meaning to the terms of the

Anti-Dumping Agreement in their appropriate context and in a manner that gives harmonious

meaning to all of the terms of the Agreement. The Panel essentially assumes that “dumped

imports” encompass only those import transactions that are made at below normal value. It also

ignores the proper relationship between “dumped imports” and “injury”.

87. “Dumped imports” must be treated in the same manner in both dumping and injury

determinations.67

If a producer or exporter is found to be dumping with a margin of dumping

greater than de minimis, all imports from that producer or exporter may be included in the volume

of “dumped imports” for purposes of determining whether injury by reason of such imports has

occurred.68

Thus, the “dumped imports” that are the focus of the injury determination include

import transactions that are made below normal value as well as those made at or above normal

value. In the absence of zeroing, the comparison between dumped imports and consequent injury

necessarily takes into account imports from a particular exporter priced both above and below the

corresponding normal value. As the Appellate Body noted in US – Zeroing (Japan):

If as a consequence of zeroing, the results of certain comparisons are

disregarded only for purposes of calculating margins of dumping, but

taken into consideration for determining injury, this would mean that the

same transactions are treated as “non-dumped” for one purpose, and as

“dumped” for another purpose. This is not in consonance with the need

for consistent treatment of a product in an anti-dumping investigation.”69

88. Contrary to the view of the Panel, therefore, it is entirely appropriate and consistent with the

concept of injury - indeed necessary - to prohibit simple zeroing in periodic reviews. To do

otherwise would not comply with the requirement for consistent treatment of a product in

calculating the margin of dumping and its effect on the domestic industry in an anti-dumping

66

Panel Report, para. 7.147.

67 Appellate Body Report, US – Zeroing (Japan), para. 128 (citing the Appellate Body Report, US – Softwood

Lumber V, para. 99).

68 Appellate Body Report, EC – Bed Linen (Article 21.5), para. 115. See also Panel Report, Argentina –

Poultry AD Duties, para. 7.303 (“We agree with the findings of the EC – Bed Linen and the EC – Bed Linen (Article

21.5) panels, and with the abovementioned observation by the EC – Bed Linen panel. On the basis of the ordinary

meaning of the text, we find that the term “dumped imports” refers to all imports attributable to producers or

exporters for which a margin of dumping greater than de minimis has been calculated.”). The Appellate Body in US

– Zeroing (Japan), noted that this is also consistent with its understanding of U.S. law. See US – Zeroing (Japan),

para. 128.

69 Appellate Body Report, US – Zeroing (Japan), para. 128, citing the Appellate Body Report, US – Softwood

Lumber V, para. 99.


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proceeding70

and would systematically overstate the margin of dumping and distort the analysis

of the potential injurious impact of the dumped imports.

V. CONSISTENCY WITH ARTICLE 2.4

89. In its written submissions before the Panel, Mexico has observed that Article 2.4, first sentence,

contains an overarching obligation requiring the authorities to make a “fair comparison” between

the normal value and export price while comparing them for purposes of calculating a margin of

dumping.71

Mexico recalls that any determination of dumping must be made for the product

under consideration taken as a whole for each exporter or producer. The Simple Zeroing

Procedures under US law, however, “result in calculation of dumping and margins of dumping

that do not reflect all of the transactions involving the product under consideration as a whole.”72

A comparison that disregards selected export transactions because the export price is above the

normal value cannot result in a determination of a margin of dumping for the product under

consideration as a whole and cannot be considered as a “fair comparison” within the meaning of

Article 2.4.

90. In Mexico’s view, zeroing is also inherently biased and hence in violation of the fair comparison

requirement of Article 2.4 because it artificially inflates the margin of dumping by ignoring

relevant export transactions. The same finding was reached with respect to zeroing in

transaction-to-transaction comparisons in US –Zeroing (Japan), where the Appellate Body found

that zeroing “distorts the prices of certain export transactions because the ‘prices of [certain]

export transactions [made] are artificially reduced.’”73

The Appellate Body further concluded

that the use of zeroing in transaction-to-transaction comparisons “artificially inflates the

magnitude of dumping, resulting in higher margins of dumping and making a positive

determination of dumping more likely.”74

The Appellate Body found: “[t]his way of calculating

cannot be described as impartial, even-handed, or unbiased.”75

All of these conclusions apply

with equal force to simple zeroing in periodic reviews, which the Appellate Body has found

inconsistent with the Agreement in two recent cases brought by the EC and Japan. The Dispute

Settlement Body has adopted each of these Appellate Body Reports.

91. While the Panel rejected Mexico’s arguments, Mexico has shown above that the Panel’s

conclusion is incorrect. Mexico observes two errors in the Panel’s conclusions on this issue.

First, the Panel erred in rejecting Mexico’s arguments concerning the consistency of simple

zeroing in periodic reviews with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 and

9.3 of the Anti-Dumping Agreement. As Mexico has demonstrated above, the Panel has

70

See Appellate Body Report, US – Softwood Lumber V, para. 99.

71 See, e.g., First Written Submission of Mexico before the panel, para. 245.

72 Ibid.

73 Appellate Body Report, US – Zeroing (Japan), para. 146 (citing Appellate Body Report, US – Softwood

Lumber V (Article 21.5), para. 139).

74 Ibid., para. 146 (citing Appellate Body Report, US – Softwood Lumber V (Article 21.5), para. 142).

75 Ibid.


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incorrectly interpreted the text of the agreements on that issue and has improperly rejected the

legal findings of the Appellate Body in at least two previous cases.

92. Second, the Panel erred by failing to address the other, independent arguments presented by

Mexico that simple zeroing in periodic reviews is inconsistent with Article 2.4’s “fair

comparison” requirement because the methodology distorts the prices of certain export

transactions by artificially reducing them, unjustifiably inflating the apparent magnitude of

dumping. Further, the Panel failed to respond to the claim that calculating margins of dumping in

this manner is not impartial, even-handed, or unbiased. By failing to consider these arguments,

the Panel failed to make an objective assessment of the matter before it as required by Article 11

of the DSU.

VI. MEXICO’S “AS APPLIED” CLAIMS

93. The Panel rejected all of Mexico’s “as applied” claims regarding simple zeroing as applied in the

five periodic reviews on Stainless Steel Sheet and Strip in Coils from Mexico carried out by the

USDOC based entirely upon the Panel’s finding that simple zeroing in periodic reviews is “as

such” not inconsistent with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 2.4, and

9.3 of the Anti-Dumping Agreement.

94. For the reasons described above, the Panel’s finding that simple zeroing in periodic reviews is “as

such” not inconsistent with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 2.4, and

9.3 of the Anti-Dumping Agreement is erroneous. Accordingly, the Panel’s consequential

rejection of Mexico’s “as applied” claims with respect to the five periodic reviews of Stainless

Steel Sheet and Strip in Coils from Mexico is erroneous and should be reversed by the Appellate

Body.

VII. THE PANEL HAS NOT FULFILLED ITS FUNCTION UNDER ARTICLE 11 OF THE

DSU

95. The DSB was established to administer the rules and procedures in the DSU.76

Underlying these

rules and procedures are Articles 3.2 and 3.3 of the DSU which establish that the dispute

settlement system is “a central element in providing security and predictability to the multilateral

trading system” and that the “prompt settlement of situations” is “essential to the effective

functioning of the WTO”. Furthering these overarching objectives is part of the DSB’s

responsibilities.

96. Under Article 11 of the DSU, the function of a panel is to assist the DSB in discharging its

responsibilities under the DSU. In this dispute, the Panel has failed to fulfil this function.

97. The Panel’s failure to comply with Article 11 of the DSU relates to its refusal to follow a

consistent line of adopted Appellate Body reports that address identical issues with respect to the

same responding party (the United States) and, more specifically, its consequent issuance of

findings and conclusions that are identical to those that have already been expressly overturned

76

DSU, Article 2.1.


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by the Appellate Body. Mexico acknowledges that, in the WTO dispute settlement system, a

panel is not generally considered to be bound by previous Appellate Body reports. However, as

the Appellate Body clearly stated in US – Oil Country Tubular Goods Sunset Reviews, “following

the Appellate Body’s conclusions in earlier disputes is not only appropriate, but is what would be

expected from panels where the issues are the same.”77

98. In the circumstances of this dispute, Mexico has been forced to appeal findings and conclusions

that are identical to those that have already been overturned in previous dispute settlement

proceedings involving “as such” challenges of the same measures and involving the United States

as the responding party. We consider that this is inconsistent with the Panel’s function to assist

the DSB in discharging its responsibilities because it interferes with the prompt settlement of this

dispute and, thereby, frustrates the effective functioning of the WTO dispute settlement system

and it diminishes the system’s security and predictability.

99. The Panel’s failure to fulfil its functions in this dispute has broader implications for the WTO

dispute settlement system. These implications are aptly illustrated in the zeroing disputes which

have degenerated into a seemingly endless circular dispute settlement process over the same

measure. This situation is completely at odds with the prompt settlement of disputes, with the

effective functioning of the dispute settlement system, and with security and predictability.

VIII. CONCLUSION

100. Mexico considers that the Panel erred in law in the interpretation and application of Articles VI:1

and VI:2 of the GATT 1994 and Articles 2.1, 2.4, and 9.3 of the Anti-Dumping Agreement.

101. Mexico requests that, upon reversal of the Panel’s erroneous findings and conclusions identified

above, the Appellate Body resolve this dispute promptly by finding that simple zeroing is “as

such” and “as applied” in the five named periodic reviews inconsistent with Articles VI:1 and

VI:2 of the GATT 1994 and Articles 2.1, 2.4, and 9.3 of the Anti-Dumping Agreement.

77

US – Oil Country Tubular Goods Sunset Reviews, para. 188.

Documents

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